©2010 CCH. All Rights Reserved. Chapter 10 Nancy Nelson pays $200,000 for land and a building in a single transaction. At the time of the purchase, 73. the land and building were appraised at $120,000 and $180,000, respectively. Nancy’s depreciable basis in the building is: e. Jay Jamison sold property to Joan Jacobs. Joan paid $100,000 in cash and $20,000 in other property (fair 74. market value). The property sold by Jay was subject to an $80,000 mortgage, which Joan assumed. Jay paid a $7,200 sales commission and $5,000 in property taxes. Jay had purchased the property three years before for $120,000—$20,000 in cash and a $100,000 mortgage. Jay had added $20,000 in improvements during the period of time in which he held the property. What is Jay’s realized gain or loss on this transaction?($32,200) loss e. Douglas Duke received a summer home from his father as a gift in 2010. The fair market value at the time 75. of the gift was $90,000 (this was also the taxable gift), and it had an adjusted basis to the father of $50,000. The father paid $9,000 in gift tax. What is Douglas’s basis in the property? e. Albert Arnett’s personal residence cost him $70,000, and it had a fair market value of $64,000 when it 76. was converted to rental use. Albert claimed $4,000 depreciation during the time it was rented. The rental building was sold for $62,000. What is his gain or loss?($8,000) loss a. ($4,000) lossb. ($2,000) lossc. no gain or lossd. $2,000 gain e. Leonard London sold a building used in his business to Michelle Martinson. He had purchased the property 77. several years previously for $340,000, $300,000 of which was the mortgage. Major improvements in the amount of $240,000 had been made. At the time of the sale, Leonard had taken $220,000 in straight-line depreciation. Leonard paid $104,000 in selling expenses. Michelle gave Leonard $400,000 in cash and unlike property with a fair market value of $240,000, assumed a delinquent real estate bill of $105,000 and assumed Leonard’s mortgage on the property in the amount of $234,000. What is Leonard’s gain on the sale? $191,000a. $385,000b. $410,000c. $503,000d. $515,000e.
546 CCH Federal Taxation—Basic Principles Chapter 10 © 2010 CCH. All Rights Reserved. Wilma Waters purchased land from Carl Carmichael for $32,000 cash, the assumption of an existing 78. mortgage of $43,000, and payment of delinquent back taxes of $8,300. Carl’s adjusted basis in the land that he had purchased as an investment was $85,000. Carl also incurred $9,330 in selling costs. What is Carl’s recognized gain or loss?($19,330)
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